Golden age is all in the imagination

Sir, Bill Dacombe (Letters, August 1) thinks there were “golden years” of “prudent banking” before 1999 thanks to the Glass-Steagall Act. Apparently he does not remember the commercial real estate lending bust of the mid-1970s, when the US banking system was arguably insolvent on a mark-to-market basis from bad loans. Or that the whole savings and loan industry was insolvent by 1979, an insolvency then exacerbated by more bad real estate loans. Or that in the early 1980s, the oil lending bubble collapsed, and so did nine of the 10 largest banks in Texas, among others. Or that the 1980s threatened a systemic banking breakdown from huge bad loans to what were then called “LDCs” (least-developed countries), which defaulted together. Or that farm lending also crashed in the 1980s. Or that, following all that, there was another huge commercial real estate lending bust in the early 1990s. Or that between 1982 and 1992, more than 2,000 US financial institutions failed.

All this happened with Glass-Steagall in force. “Golden years of prudent banking” ? Only for those with little knowledge of banking history and a longing for an imagined past.